Start-ups are heaving a sigh of relief as the Finance Minister announced measures to do away with the long pending contentious issue of Angel Tax, which many of them had to cough up for raising Angel funding under Section 56 of the Income Tax Act.

Also, special administrative arrangements will be made by the Central Board of Direct Taxes for pending assessments of start-ups and redressal of their grievances. Start-ups have been assured that no inquiry or verification in such cases can be carried out by the Assessing Officer without obtaining approval of his supervisory officer. This provision will do away with much of the angst among start-ups who were subjected to aggressive questioning by the Income Tax department.

A TV channel exclusively for start-ups under the Doordarshan boutique will be designed and executed by start-ups themselves and will also serve as a platform for promoting them, discussing issues affecting their growth, match making with VCs and for funding and tax planning, came as a pleasant surprise to many. Although it remains to be seen how it will be executed on the ground.

The Budget sounded the bugle for fostering rural entrepreneurship for those depending on agriculture and traditional industries by announcing the setting up of 80 Livelihood Business Incubators and 20 Technology Business Incubators this fiscal with the aim to develop 75,000 skilled entrepreneurs in agro-rural industry sectors. “The Government has tried to broad base and foster entrepreneurship beyond metros to Tier 2 and 3 cities which is a good sign. And doing away with Angel Tax is welcome” said Bhaskar Majumdar, Managing Partner, Unicorn India Ventures.

“The Budget looks promising for start-ups and our rating is good. However, the promises made must be put into practice soon and aggressive scrutiny of start-ups receiving funding must end” said Archit Gupta, founder CEO of online tax filing start-up ClearTax. “A capital gains tax exemption is allowed under Section 54GB of the Act to an investor who sells a residential house or plot and invests the net consideration in equity shares of a start-up company, which company in turn has to use the amount to purchase a new asset. This exemption which was available till March 32, 2019 is now extended to March 31, 2021, which is good” added Gupta.

Author, mentor and co-founder of Again Drinks, K Vaitheeswaran felt, though the intent of the Budget was very positive the idea of Livelihood Business Incubators and Tech Business Incubators may be hard to execute on the ground, given the quality of existing incubators in the market today. “These incubators start with lofty ambitions but end up becoming real estate spaces to work in” he said.

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